Beijer Ref AB (publ)

Hi everyone, Christopher and Joel here. Welcome to Q1 2025 report. So we'll get straight into some of our slides and then we'll finish off as usual with a Q&A. so uh summarizing uh q1 um from from our point of view a good quarter uh across the globe um and part of the heading of course was a very very good eps growth and we'll come back to that uh but a total sales growth of 16 percent uh while the organic growth was four percent uh and pretty stable or good across the globe us we'll come back to that and then may and apec we continue to have good growth from acquisition which of course is part of the the business model which we will continue going forward with um so all in all uh we would say a stable good first quarter um especially with some uncertain times here it i would say it shows the model continues to be uh very good in even in these times And then on the EBITDA, a growth of 13% with stable margins compared to last year. We'll come back a little bit more on the different regions, but 9.4%. So happy with the margin development in Q1. Also cash flow positive. Of course, the people who knows Bayer F in details, usually Q1 and Q2 is an inventory and accounts receives a build up and then we usually flush through cash flow in Q3 and Q4. So I would say still a good and stable cash flow for being Q1. So happy with that as well. And then an EPS growth of 20%, which is very happy about on there. And then, as you know, we closed the Cool Fuel acquisition beginning of the year, the leading HVAC distributor in Hungary. So all in all, in the total, good growth, good margins and especially good profit growth in the quarter. Okay, moving on to the different segments. Coming back to the word good and stable in all segments of positive growth in their HVAC 6% growth, which is also across the globe, I would say. Stable in the commercial refrigeration plus 2%, which is a decent level in that product category. And then OEM, 3%, which is a little bit lower than what we usually have in that segment. So I'm sure I'll get a question or two, but we'll have the same answer. We see the order book coming up very good here, so we expect that growth to accelerate as we go through the year. So it should be nice growth there as we move into the next couple quarters. Okay, moving on to EMEA. Growth of 14% driven by the HVAC, of course, related to the acquisition we've done over the last 12 months on Gia Group and Cool4U. Other than that, it continues to be a stable market with good growth in Eastern Europe. Africa has been developing very well for the first time in a couple of years. That's nice. And then stable market in the Nordics and Central Europe and continue to be weaker in Southern Europe, especially. And also worth mentioning, of course, when you talk about EMEA and North America, it is pre-season time, especially in the HVAC segments. Of course, it's more bigger quarters ahead as we move into Q2 and Q3. The OM segment we talked about, but we see that ramping up fairly nicely. And I know I've been talking the last couple of quarters about good quoting levels. We see the orders now building in the backlog. So it should be improving as we go through the year. And then if you look at the different margins, stable margins in the region at a good level for being Q1. So all in all, I mean, we'll come back to that, another stable quarter with solid margins in EMEA. And we look forward to moving into the high season here as things start heating up for Bayreuth. Then moving over to APAC, APAC continues to... do very well, both on sales and the margin evolution. I think you've seen it now for some quarters. So we are in a good position. for sure in APAC and good markets in especially Australia and taking market share for sure in this region and been doing for quite some time and also driving the margin in there. So we did have in March a cyclone that did limit sales for three to four days. uh i will expect to pick that pick that up not not in uh q2 but over the rest of the year as things needs to get prepared so We're very happy with the development in there. And we also, maybe worth mentioning on this slide, we did a small acquisition related to securing some more quotas for refrigerants going forward. So very strategic for us, no major impact on the business, but puts us in a good position to continue to drive the market share evolution in especially Australia. moving on to uh to the us um solid uh six percent organic growth and a very good plus 31 percent uh growth together with especially our acquisitions their young supply solid margins if you adjust for the dilution of course a lot of things happening in the us and i'm sure we'll come back that on question on tariffs supply chain etc but we continue to do well in our segments as you know our us business is mainly built on aftermarket service replacement And we see that market continue to be stable. And of course, the U.S. is the same that Q1 is a smaller quarter as we move into Q2 and Q3 and waiting for the first heat wave to hit Alabama, Tennessee or Georgia. So all in all, I would say a very solid quarter again from the U.S. platform. so if you look at the the growth uh per quarter here over uh the last couple years of course continued to be very good and we can also see now we had organic growth for the last four quarters so we're happy about that in today's market i would say it's not a booming market but i think we continue to do well and it also shows um how the business model works in in uh in a little bit more uncertain times in the aftermarket and service replacement. So we look forward to to see the trajectory going forward, but very happy with this slide, of course. And same moving on to the margin. I mean, it's a stable margin on there. Our Q4 and Q1 are our smallest quarters. Of course, we expect that to pick up. But all in all, in all regions, stable, good in the US, stable in May, and we'll continue to make progress in the APAC region on there. So happy about the margin evolution in Q1. It is where it should be in today's market. And then wrapping up my part of the presentation, I believe, with just summarizing 16% growth, stable 4%, nice EBITDA drop through, of course, and then an EPS growth of 20%. So all in all, I would say a very good quarter from Bayref.

All right. Good morning, everyone. As usual, dive straight into the EBIT of 778 million in the quarter, which is up 14% compared to last year. Financial net in the quarter amounted to 131 million, same level as in Q4, and 10 million below Q1 last year on the back of lower rates, despite higher net debt levels. The way it's been now, base rates are approximately 1.5% lower compared to a year ago. On the tax side, we report 165 million in the quarter, which is 25% in line with last year. All in all, resulting in a net profit of 482 million compared to the 408 last year. And if you move over then to Our EPS, we report 0.94 crowns, which is 20% up compared to last year, which we think is a very nice number in combination of good growth and stable margins and good development on our financial expenses. On the cash flow side, we continue to deliver a solid operational cash flow of 450 million approximately, despite the seasonal buildup of 340 million in networking capital, which is in line with our expectations. And as Christopher mentioned here in the beginning, I still like to point out that Q1 is the quarter that we are building up inventory for the high season, as well as building AR as we went going into this high season. On the next slide here you see that we have now delivered positive cash flow for seven consecutive quarters and we are happy about the level in Q1 and this is where we should be now when we have a more stabilized stabilized supply situation compared to in 22 and 23. Finally, shortly on leverage, our leverage ratio measured as net debt to EBITDA, excluding leasing and pension, was sequentially stable at 1.8, which is 0.2 above last year. And net debt is 1.6 billion higher than a year ago than related to the acquisitions that we have closed over the last 12 months.

All right, to wrap it up, but thank you all to wrap things up. You heard most of it already. Good quarter in interesting times with stable organic growth, nice acquisition growth, good margins, stable cash flow in there. So I think we're very happy about the execution in all our regions. during the quarter and, of course, the last years as well. Long term, no major changes for us. Continue to be nice tailwinds, of course, here in the Maya with regulation. We see that also in Australia moving into New Zealand. In the US, you're starting the transition into a new refrigerant, the 812 or 454B. solutions that will come more and more during the year. We continue to develop the U.S. platform, opening branches, have another one coming online here in May, launching the private label heroes in the U.S. April, May. So all in all, we continue to focus on driving the value creation for the long term of BayerF and um it's working it's working well so with that uh um and may worth mention also on the acquisition side i'm sure we'll talk about in the q a continue to have a good pipeline there um for for 20 uh 25 and beyond so with that we're finished and opening up for uh q and a

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Gustav Schwerin from Handelsbanken. Please go ahead.

Yeah, morning. Two questions. First, we heard about some... Pretty big price increases effective April from one USOM yesterday. They said acceptance was quite good as well, which I guess is with the final customer they're giving the distribution model. I mean, is this what you're seeing from all the OEMs right now? And if that is the case, I assume you have followed. To add to that, actually, I mean, can you comment anything on what kind of response you have seen among your customers over the past month then? That's the first one.

Yeah, so I guess you're alluding to that comment on in the US market, specifically. And we see the same. Yeah, so so we don't see any difference in the US, we saw most of price increases from not not only OEM, but also across the board from small and midsize suppliers in the US coming through here in q1. And we're passing it on as moving to q2. There's no it's from everyone right so there's no uh it's got it's getting passed through i don't have any other comments we can see it starting to come through here in april and we'll continue in may and june as we go through the cycle so nothing uh nothing strange and also remembering in the business model well with aftermarket service replacement we always pass on the price increases so

um in general the general comment for us in that type of market it's positive um for us so we expect that to come through here in q2 but just to be very clear here because i mean most of the oms announced price increases during q1 from what i understand what we heard yesterday from one of the oms was another two rounds of price increases early april so i'm just wondering if if all the oms have done multiple increases now.

The way I would answer it is that we talk about OEM here, we're talking about HVAC manufacturers, and in my view, you have major ones or, and I won't get into who's who, but you have, of course, Carrier Lenox Train and Rheem and Daikin to a certain extent. And a couple of them has done two. A couple has done one. And I won't go into who's who and if the other two are waiting to do their second one or not. But the comment you heard, because I listened in to last night, we're in a similar position for BayerF, like one of our other distributors in the US.

Perfect. Secondly, you mentioned the M&A pipeline. What's your general thinking on further acquisitions in the US in the short term? Are you putting those a bit on hold given uncertainties or is it business as usual?

No, it's probably somewhere in between. Nothing is on hold. It's more of aligning together with the sellers and seeing how the market develops. So we continue and do our due diligence and alignment and probably also in a prudent way, decide when and how we sold this together in these uncertain times. In general, in the US, as you saw, it was a stable growth in Q1. Right now, the waters are not super choppy for us in the US. And you put a caveat, you never know what happens when you wake up tomorrow, right? um we have a us guy here and he checks to to social every morning to see what's happening so in general i would say that we're more aligning on together with companies we're talking to what the effects are and could be and how their position but at this moment it's uh it's a lot of things happening but it's not it's not very choppy for us in the us in our model so we'll continue to uh to focus and as it looks today, also have a good year on the acquisition side in the US as we move through 2025.

Okay, thank you. Thank you.

The next question comes from Vivek Mita from Citi. Please go ahead.

thank you very much everyone and good morning i have two questions if i may um the first is a follow-up really on the previous question uh talking about tariffs there's of course the direct impact and you've elaborated on that and as well that yeah you're not seeing a very chalky environment but if we just think as we go into the second half in 2026 i appreciate there is a lot of uncertainty here but how are you thinking about how this could impact the growth trajectory, particularly for maybe more discretionary renovation, as well as the minority of sales which come from new construction. Thank you.

Yeah, I think you're absolutely right. I mean, it's a lot of things and unknowns out there. But if I just start to talk to what we've seen so far, and then the rest becomes more a high level analysis or hypothesis, depending on what happens the next three to six to nine months, right? So far, it's been a fairly Our suppliers mainly in the US, if we talk price increases of 3% to 5% in the market flushing through here, that's not a revolution. Supply chain continues to be very stable. We have nice products and good inventory position for the season. The activity level is still for us good and continue to be good here in April. So the factual things, what's happening in our business is good in the US. Of course, there's an enormous amount of discussion on the tariff side and what's happening or not, which are going up and down. But so far, our business has not been major affected by that. And we do keep in touch all the time with our main suppliers, especially on the HVAC side. HVAC side and a very, you know, partnership discussion how we manage this together. So on that side, so far, it's been good. If you look in the future, as you alluded to in your question, how will this affect the end demand and the consumer and etc. And they need to break down different components, right? 95% of our business is aftermarket service replacement, right? So we're not super active in new construction uh we're not super active on the commercial side even if that's been pretty good over the last years in the us so for us the main business is still replacing servicing fixing system that's break or are old um etc so let's see how that market is uh will react to these changes or the consumer, but also in the back of our heads, remembering 78% of our customers finance what they do. It's mostly related to that type of question. I would say interest rate will have a bigger impact on this than the discussion. There's still a decent market in the US on the job side. Try and summarize that. So far, we haven't seen any effects of everything that's happening in the US on our business.

That's very helpful. Thank you. My second question is again on the tariffs theme. Just following up on your comments, you're still expecting to launch a private label in the US in April and May. Your production and sourcing tends to be quite regional, but my understanding is that you do sorts of private label products from uh all right those are manufactured in asia so could you just uh elaborate on is there any impact to that uh launch uh from the tariffs thank you uh no because the product is already on the ground so we're good to go thank you thank you

The next question comes from Carl Ragnarstam from Nordia. Please go ahead.

Good morning. It's Carl here from Nordia. It's obviously good to see that you feel comfortable around current trading in the U.S. You grew, obviously, 6% organically in the quarter. Could you give some flavor if you've seen some dynamic shifts between the surf component replacement sales and equipment sales? It would be super helpful.

uh the short answer is no uh and it's also a little bit when you look those questions seasonality on on on you know q4 and q1 uh where you might uh have some more replacement repair and now you move into more equipment heavy part of the the season so i think it's it's it's for us there's no uh uh big changes in in in the mix or a business running we have Over the last six months, though, have had a pretty good activity on projects and also the commercial side. But it's also because it's a small segment for us. So we're going to grow in that segment, but from a smaller base. So in general, not any big changes in our business as we see it based on the last couple of quarters.

And if we would see a more muted market at some point in the US, it would be the equipment side. I guess that is more cyclical, right? And if that would be the case, do you think that it would be gross margin enhancing that we see sort of the spare part side gaining shares?

yeah i think it's of course we have a higher gross margin percentage on on the parts and services and if you change a fan motor or compressor or or parts um so but in my view it's still that's the way the market's been over the last two years if you look at statistics housing sales in the us has been a 30-year low the last two three years right So that continues to be on a stable low level. So right now we don't have any parameters. You know, we're waiting for the housing market to start wakening up and there'll be a nice tailwind when it does. I think what's happened now is that it's probably going to take longer than expected because of all the turbulence in the US. But in the meantime, the business continues to tick on at a decent pace.

Okay, very clear. If you look at the refrigerant mix in the U.S. during Q1, could you shed some light on what portion is 410? What do you expect for Q2? And also you took the bet sort of seemingly at least on R410 holding quite substantial inventory of that. Do you think that it will lead to sort of gained market shares compared to competitors taking the ATL bets or more ATL bets and also on that note how sticky if you gain market shares do you think that they are?

Yeah I think it's a hard question to answer and we know less of course what our competitors have done and I know it's a phrase question, I wouldn't use the word we took a bet on our side. We believe as the market transition into the new more A2L driven solutions that you would still have a lot of interest in this year on the standard solution on there. For us, we built up inventory to support that because talking to our customers and remembering that most and most of our customers are small installers, right? As we don't do big new construction and big commercial project at the extent in the market. So for us, it was more a strategy driven by servicing our customers in the best way we can. but still be enough conservative that we don't sit with excess inventory as the year goes through. So I'm not sure if we're going to take market share with this position, but we continue to service our customers in a good way. And I would say in Q1, probably 85-90% of what we sold was the 410A solution and in Q2, I don't know at this day and age, but of course the ATL will continue to grow into Q2 and be a bigger part for every month we move in there. uh you know tell you more as we go through q2 what what the trend is but i would more say that we sit with a very competitive solution we're also now putting in uh you know the sinclair solution ducted uh solution based on a12s so we have a nice price position on that product as well to service our customers um and we will continue to expand on our branch network so uh All in all, I think we're happy with our strategy, at least for now.

Okay, very clear. And the final one, if I may, is on Europe, which is obviously our biggest exposure. And gradually moving into the high seas. Because I guess it's a tricky market. East Europe better, less good, I guess, in southern parts.

from an inventory point of view how do you think that you'll position yourself to to the high seas and what what are your so what is the strategy given that it is a tricky market to read i guess currently so uh we're always positive and our guys out in the market are always even more positive so we're always well positioned when it comes to inventory uh you know that heat wave can always come and then we need to be sorted out no but of course we treat The model, the way we built up won't get into super details areas that we have regional structures, right? So we have an Eastern Europe market and a regional leader for that. We have a Southern Europe, we have a Nordics, we have central in that. So we divide the market in different components. Of course, Eastern Europe has been seeing this trend for now a couple of years. They've built up accordingly. You're a little bit more conservative in the southern part because of how the market has been and et cetera. So it's treated very regional how you build it up. And usually with those regions, you can exchange inventory between each other as well, depending on the market plays out. So I think the model works well there. um and and it the market continues to be you know okay and and the biggest weakness we had for the last 12 months have been france uh if you look at southern europe actually italy is okay uh spain is is okay so it's mostly france and you know one day that market will turn as well and then be a nice upside for us when it does but i think also that's a little bit the business model we have uh you know being in 46 countries around the world you have ups and downs also in the us in different regions will be but when you put them together you get a pretty nice uh combination and of course if we get a booming market in france later on this year it'd be a nice upside but i'm not betting on that right now we we need to see how the you know how the season uh transpires

Okay, very helpful. Thank you. Thank you.

The next question comes from Victor Trollston from Dansky. Please go ahead.

Yes, thank you very much. Morning, guys. Thank you for taking my questions. So, first on pricing, I guess, in... in the us if you could help us just understand the sort of base that we're coming out coming from now so how much of the six percent organic growth in in the us now in q1 was pricing and if you could help us with any comments on on the expected price impact coming in q2 i thought you said three to five percent coming but if you could confirm that to us

Yeah, so Q1 was limited price effects, and it usually is. If you take normal times in the US, and it's not normal times now, on the HVAC side, you usually get the updated pricing in March and you execute it in April. That's a more normal pricing pattern. And of course, as the season starts moving in, you have a lot, I mean, I'm trying not to make it too long, but you have a lot of components in the US this year because you also have the 812 transition and you have the old 14A that you bought in. And of course, there's no price increases from the OEMs on the 14A because it's not being made anymore. So the price increases you're getting from the OEM side is on the A2L product. So I would say in the majority, the vast majority in Q1 was volume. I mean, maybe it's 1%. I don't know, but it's vast majorities. And as you move through the quarter, we see price increases on most of our products flashing through in Q2 of 3% to 5%. But that's, of course, a timing effect as well, how they flash through. So it's not a huge difference. I think the component that makes it more different, but for us, it's probably going to be more Q3, Q4 next year is also the transition into the A12s because those products are, I don't know, 8% to 10% more expensive as you move into that product portfolio. So did you get all that?

Yeah, that was super helpful. I'm writing fast here, but so that's super helpful. But I guess so we should not expect, and you mentioned this previously, I know, but no additional impact from the A12 transition, I call it now in Q2 or Q3, Q4, that's more 2026. So I guess the key question is the three to five.

if you know including the trail if you want yeah because i think it's a fair assumption and also remembering our business model where 55 60 is parts and supply and 40 is equipment in in the q2 q3 you get a little bit higher weight on on on the equipment side uh because you're in season uh of course so you'll you you would expect uh some impact uh in there but you know for making it simple maybe you assume 20 25 812 transition in Q2 it's a guess it might be more but you know that could be an assumption uh to to work on and then you'll get I assume 40, 50%, 60, 70 in Q3 and so on. So there will be some impact from it for sure, probably even more in June than in April. So month by month that portfolio will take bigger and bigger place in the sales.

And I guess that comes on top of the other price hikes we are seeing. But let us work on those assumptions. But I guess if you could add any flavor on the impact on gross margins and sort of the drop through to profitability then on this price hike? Should we expect, you know, I guess a positive impact on profitability as well? Or what would you say?

I would always say just think about it as stable. no but yeah okay now but in general right the day to else of course we should have a better drop through but the same margin right percentage margin because it it's more it's not going to be you know an increased percentage margin but of course we're going to sell the same product 10 more expensive with the same type of uh fixed cost base So right now, I would just assume, you know, I think we're in a good pattern. We assume the margin should continue to be stable, so we'll go forward. And hopefully, you know, these things, and if the market continues to be okay, it will help on the growth side of the business.

Okay, fair enough. And sorry for pushing you a bit, but the 3% to 5%, you know, price hikes on top of A12, if you want, or, you know, just to mitigate tariffs. I guess that should impact margins percentage-wise or not.

um i mean it's a little bit the way i work you know i believe it when i see it and i have no concern just to make clear whatever price increase we get is passed through i mean that's how the business model works and will continue to work and remember in replacement aftermarket service that that's how you work uh it's not a project-based business it's a day-to-day uh run business How then the margin will evaluate. Let's see when we run through Q2 and we can probably have more details on it depending how it develops. But in general, I would say stable good margins. And remember also in the US, we continue to open branches and invest in fixed costs. So we're more in a growth pattern than a margin pattern, if I may say so.

And just finally on that topic, because I guess the poor US consumer has been through a lot in the track market the last couple of years for sure. So just given the replacement characteristic of your business, or is there no risk of down trading i i think what's go talked a bit about it yesterday that they're actually seeing that you know enough is enough to some extent for for the customer and and how is your portfolio done positioned if the customer would you know don't trade if they would down trade i now have a fantastic product for you it's called an 812 six clear fantastic quality a nice brand and then we'll stand behind it so i'm ready

good good good no but it is it gives us it gives us a very nice tool in in in in running the business but our assumptions are still mostly related to the what we see in our business and and the installers and install base on our premium brand that we carry we don't see any of those effects so our main strategy, we have the option right now, but the main strategy with bringing in our private label is to go after some new construction market, some family housing and markets that we haven't played in before because it's more a transactional brand. And now with the product portfolio we have there, we can go after that and make decent margins. So the strategy is not to play the game or whatever you said first, but we have the option if the consumer or our customer wants to Super. Very fair. Thank you very much. Thank you.

The next question comes from Adela Dashian from Jefferies. Please go ahead.

Good morning, gentlemen. A lot of good questions already asked and answered. I'm going to actually stick on the US topic a bit here as well. I mean, we've talked about the positive contributions from price increases. But at the same time, we're still seeing the offsetting effect, I guess, currently from the margin dilution from the recent acquisitions. Could you maybe help us or guide us in a good direction of what this specifics constitutes? I mean, this is one percentage point. Is that what we should anticipate that the effect will be even going forward or what's

yeah how should we think about that yeah i'll let you all uh answer in detail i think you should think about it uh like this that it it's it's one percent dilution right uh and you should you know as we move into april we're back you know it's it's gonna be uh apples to apples uh because that's when we did acquisition i believe of young supply and and i would assume the stable margins uh going forward in in the us uh because of course we are reinvesting uh and will continue to invest quite a lot in in branches and fixed business so even if we drive improvement in the underlying margin our ambition is as and i think i said it before to uh continue good stable margins and focus on on taking market share and driving growth in the us launching think clear opening branches investing in e-commerce so so we're trying to navigate both in the US to build the platform out. And of course, we'll make more acquisitions in the US as we go through this year and next year. So I think the underlying assumption is to assume the stable levels with that dilution that's been through the acquisition so far.

Yeah, I think there is a relatively little left for me to add on that. But I mean, it's exactly that, right? The latest acquisition we did in the US was done, I would say it was in the end of April. So there is a slight effect, I would say, in Q2 from that. But then the comparison is in the numbers. that together with the investments we're doing. And so I think the answer from Christopher was complete.

But surely launching private label is going to result in additional investment needs that you didn't have last year, correct? I mean, so yeah, the way to reach a stable margin development then for this year is through the positive impact from price increases.

Yeah, and then of course, we always work with We're getting, I mean, we have in our business model, driving synergies and improvement. And it's not only that, it's pricing tools, it's on the purchasing side, it's rebate discount and models. And of course, as you, down the road, launch a private label, that should also be positive. for the margin, but we're trying to balance those things too, as I said, having good margins in the U.S., continue to have those good margins and grow faster than the market in the U.S.

Great. And then could you please remind us of what your U.S. exposure or what percentage of your U.S. exposure that is impacted by the HL transition today? I think you previously said 20%, if I'm not mistaken.

I think in Q1, it's 10 to 15% of our sales of equipment that's been A12. And that's going to ramp up month by month in Q2. So I think we'll get back to you as we run through Q2, what we're trending at. But I'm sure as you move into June, I would expect to be trending about 50% on the A12. I'm guessing now, but that would make sense.

Got it. All right. That's all for me. Thank you.

Thank you.

The next question comes from Carl Boakvist from ABG Sundahl Collier. Please go ahead.

Thank you. Good morning. Question on APAC, a region where you said you had adverse weather effects affecting you, and yet you still grew 7% organically. So the effects of the weather and potential branch closures etc. How much do you think that had an impact on growth figures in Q1?

Yeah so from our side I mean we had a closure on three to four days and in quite a large part of our Australian business. When we look at it we are think we saw the underlying pace in the business in uh in the apec region was at a similar level as in in q4 so uh i would say we are really really happy with uh with the pace uh in the quarter uh despite of the closures in in the region so uh generally the gap between uh Q4 and Q1 in organic growth in APAC is caused by this closure period.

Understood and then in EMEA the margin pressure that you in Q4 highlighted from heat pumps and now in Q1 you say it will gradually have a smaller effect if you just look year over year the margin was only down 0.1 compared to 0.7 in Q4 so how much of an effect should we actually factor in from this heat pump dynamics in Q2 and

I don't have the mathematics exactly because it points here and points there. But I think the assumption that we have done is that it will be not visible as we run through in Q2 and Q3 because our mix completely changes, right? We're focused on the cooling side and it takes over and is the main product that we sell. So I think the fair assumption is that we we're mainly through this type of flush out of the inventory in Eastern Europe. And as we replenish it and move into Q4, we don't expect to to have any real issues with that component.

No, and you need to look back a little bit on the margin gap in Q4 as well. I mean, there you had an enhanced margin issue, so to speak, from the strengthening of the US dollar, which added to the dilution from the heat pump side, reversed now in Q1, where the euro strengthened against the dollar again. So that's why I have a smaller gap here in Q1. And as Christopher said, we don't expect the heat pumps to be any visible driver to any extent here going forward in Q2 and Q3.

Understood. The final one is just in general in these turbulent times, do you feel that you are still able to gain market share? I mean, you clearly talked about a lot of initiatives you've taken throughout your organization over the past five years, but it would be interesting to hear.

on one quarter is one quarter but um what we've seen and when we do analysis we have main regions where i won't get into detail where we're taking market share for sure but it's also uh part of the model is moving to new segments with with the you know the private label absolutely taking market share but that whole market is taking market share in general so it's also moving into those trends i think on the hvac side absolutely on the OEM side absolutely and then refrigeration I would say is stable and the focus on you know expanding the refrigeration side is more on maybe the US and bringing into new branches and down by but at some small level so I would say on HVAC and OEM you can put us up against anyone I think we're in a very good position understood that's all from my side thank you Thank you.

The next question comes from Douglas Lindahl from DNB Markets. Please go ahead.

Good morning, Christopher and Joel. Thanks for squeezing in a question from my side as well. Coming back to APAC just briefly, I would call it pretty impressive margin execution here for the quarter. Is this as good as we can see the profitability in that region or

you trying to balance this more towards growth in future how should we think about profitability for that region specifically yeah we're never happy but you're not allowed to increase your expectations so keep them stable now it's always more things to do but of course we we said all along that we we want to get it up to the 10 plus as a region and and focus on growth. But of course, with this higher organic growth, you get a nicer drop through, you get things happening when you're moving at 7-8% organic growth. So that's also part of the success story. And you've seen a lot of good market and work on the synergies with the acquisitions we've done there with a much more better supply chain, also building up private label, etc. But I think it's getting, as you said, to a good level. And we also see more ducted sales and integrated solution in our mix versus just selling split system. But you're right, I think we're getting to a good level. It's not going to stop us to drive the margin but if we can continue having a good growth trajectory with these margins uh that'd be nice development but there's still some work to do for sure in in the apac region and also remembering it sounds like a parenthesis uh big market for us it is new zealand and that's been probably in a recession the last two years. So that should also pick up maybe not this year, but next year. So, yeah, we feel good about the APAC region and direction it's going.

OK, thank you. That's it for me.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So thanks all for listening in and let's all hope we have a fantastic summer and we'll talk again in July. And if you have any more questions, feel free to reach out. So thank you very much for this hour. Thank you.